Reviewing your spending and saving habits and getting ahead of tax season can help set a strong financial foundation for the year. Taking time to evaluate where your money can allow you to identify opportunities to save more, adjust your budget, and align your finances with your goals. Preparing for taxes early by organizing documents and considering tax-efficient strategies can also reduce stress and help you make informed decisions before deadlines approach.
- Review and reset your budget
Start the year by taking stock of your spending and saving. Look at what you spent last year, identify areas to cut back or reallocate, and build a budget that supports your goals for the coming months. This fresh review helps you control expenses and boost savings capacity.
Base your review on actual spending, not estimates. Look at bank statements, credit card transactions, and app reports from the past few months to see where your money really went. Check whether your spending aligns with what matters most to you. If you value saving or debt reduction but most of your money went to non-essentials, it may be time to rebalance.
Ask yourself:
- Am I saving as much as I planned?
- Are my priorities reflected in my spending?
Look for small adjustments that can make a big difference, such as unused subscriptions, frequent takeout, or impulse purchases. Cutting or reducing these expenses can free up cash without major lifestyle changes. Budgets aren’t static. Changes in income, rent, utilities, childcare, or insurance should trigger a budget update. Make sure your plan reflects your current situation—not last year’s. Review fixed costs (rent, insurance, loan payments) and variable costs (groceries, entertainment, travel). Even fixed expenses may be negotiable or shopped around for over time. Lastly, don’t wait until the end of the year. Monthly or quarterly reviews help you catch issues early and make small corrections before they become big problems.
A good budget review isn’t about perfection—it’s about awareness and adjustment. Regular check-ins help ensure your money is working for you, not against you.
- Update your savings strategy
Ensure you’re saving enough — especially in tax-advantaged accounts. With higher contribution limits for IRAs ($7,500 with an additional $1,100 catch-up contribution for those over age 50) and employer retirement plans in 2026, now is a good time to boost your contributions and take full advantage of matches or catch-up opportunities. 1 - Get ahead on 2026 Tax Planning
Prepare early for taxes by organizing paperwork, tracking deductions, and planning strategies that could lower your tax bill. Starting sooner can reduce stress and help you make better decisions (like tax-efficient retirement contributions) before filing deadlines. While the standard deduction has historically been better than itemized deductions for most individuals, new OBBA tax-related legislation passed on July 4th, 2025, increased the cap on SALT (state & local taxes) from $10,000 to $40,000. This is especially relevant for individuals in states with higher property taxes.2
Lastly, consider saving your receipts for charitable deductions. Starting in 2026, a new “universal” deduction allows non-itemizers to deduct up to $1,000 (2,000 married filing jointly) for cash donations.3
- Check long-term goals and plans
The start of the year is an ideal time to revisit your long-term financial goals and ensure they remain aligned with your current circumstances.
Review retirement savings targets, emergency fund levels, insurance coverage, and estate-planning documents to confirm they reflect your income, lifestyle, and future priorities. Life changes—such as career moves, family growth, or shifts in financial responsibilities—can affect these plans, making periodic updates essential. Taking time to reassess and adjust your long-term strategy helps strengthen your overall financial foundation and keeps you on track toward lasting financial security throughout the year.
Lastly, check up on the risk level of your investment & retirement accounts. If you are near or in retirement, is your portfolio adequately allocated to meet your future goals? Your risk tolerance should also reflect personal factors, including income stability, age, financial obligations, and emotional comfort with market fluctuations. A portfolio that aligns with your risk tolerance helps reduce the likelihood of making reactive decisions during periods of market volatility.
Sources:
https://www.morningstar.com/personal-finance/4-financial-to-dos-kick-off-new-year
https://tax.thomsonreuters.com/blog/how-the-one-big-beautiful-bill-reshapes-salt-planning/
https://taxfoundation.org/blog/charitable-deduction-big-beautiful-bill/
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